COP24 overshadowed by market failure as countries fail to agree on basic accounting principles and the future of the CDM
COP24 closed this evening in Katowice, Poland, more than 24 hours later than initially planned. Despite smooth progress at first, negotiations ended in confusion as it proved impossible to find an agreement within the article 6 negotiations, which work to set up two new carbon markets for the post-2020 period.
The text presented to all 197 countries was, rightly, deemed unacceptable by many who pointed at its many accounting loopholes, including on the avoidance of double counting, ensuring the environmental integrity of credits, and reporting transparently on transfers.
In a non-compromise show of force, Brazil refused to accept rules which would require the application of corresponding adjustments for transferred credits, an essential requirement to avoid double counting of emission reductions. Without such adjustments, a country would be able to claim emission reductions towards its own domestic targets, and sell those reductions to another entity, to be used towards their target. Coupled with the absence of any limits on the use of markets, this means countries could fulfil their climate commitments without reducing their emissions by a single tonne.
Despite a strong signal from civil society asking for the end of the Clean Development Mechanism, no agreement was found on the future of this flawed offsetting mechanism. As countries with a large amount of supply, such as Brazil, eye post-2020 climate commitments to dump their supply of low quality and outdated credits on unsuspecting buyers.
Other problematic elements of the proposed text included weak, voluntary requirements for delivering “overall mitigation in global emissions” (hence locking countries into another era of zero-sum offsetting trades), and the absence of a definition for what an Internationally Transferred Mitigation Outcome (ITMO) is.
Positively, the proposed text supported the establishment of a grievance mechanism, which would be a welcome first step to improving the social and environmental safeguards of market mechanisms.
Commenting on this failed attempt at adopting the rules of the new market, Gilles Dufrasne, Policy Officer for Carbon pricing, said:
“Avoiding double counting and not allowing the Clean Development Mechanism to undermine the Paris Agreement are the two most essential requirements for post-2020 carbon markets. The fact that several countries are pushing with such strength against these basic safeguards shows that they are in full denial of the real world impacts of carbon markets.
The last-minute article 6 standoff showed that financial interests still trump environmental integrity in some countries, despite the indisputable evidence of the climate crisis. A few countries prevented the most essential accounting requirements to be adopted, while in parallel defending the future of the flawed Clean Development Mechanism. This could blow a hole in the Paris Agreement by allowing NDCs to be met through credits with no environmental integrity, while cooking the books.”
Countries agreed to continue work at the next UNFCCC session, in June 2019, with the objective of delivering the rules at COP25, which will take place in November 2019 in Chile.
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25 Feb 2021